Page 206 - DMGT509_RURAL MARKETING

Unit 10: Distribution Strategies for Rural Market

Exclusive Areas Notes

Dealers want the sellers to offer the products only to them in their designated area. The dealer
also gets bound to sell the products in his area only. In case the seller finds the dealer is not
selling as per his expectations, he has to either cancel the dealership as per the agreed terms or
consider appointing other persons to sell in the same area. To avoid any conflict the dealership
agreement should have a clause, which allows the seller to appoint more dealers.

Product Bundling

Many sellers try to sell their less selling products together with the fast moving one’s. They sell
the package deal or bundled products (popular name for computer software combinations). The
dealers can object to such deals.
Monopolies and Restrictive Trade Practices Act (MRTP) as it is popularly known forbids the
sellers to have such agreements and dealers can take recourse against any such practice by
writing to MRTP. However, in practice, most such deals are done in full cooperation of the
dealers and dealer agreements have only an unwritten clause for such activities.

We can summarize the activities of Distributors/Wholesalers as follows:
1. Give large volume business to the manufacturers; operate through dealers and retailers to
cover the geographic area assigned to them. Sell small number of items only. Sell to the
second level of the distribution chain, that is the dealer or the retailer as also to bulk
industrial buyers.

2. Purchase goods for resale from manufacturers in India or through imports.
3. Some have their own retail outlets also.
4. Have technical knowledge required to sell the product. Can provide product service to the
customers.
5. Make profits on large turnover even with low margins.
Similarly the activities of retailers can be summed up as given below:
1. Sell a large variety of multi-brand products.

2. Sell in low volumes for each product as compared to the distributor of the product, who
handles a large number of retailers.
3. Sell to customers/consumers.

4. Purchase goods from wholesalers.
5. Location of retail shop, its facade, inner displays, window displays, salespersons and shop
ambience are extremely important for the success of the shop.

6. Profit margins for each product are higher than those of distributor.
7. Product mix, product shelf life are major considerations.
With Internet marketing, telemarketing and tele-shopping networks, which sell through
television the established channel of distribution, may be threatened in the near future.

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